National sovereignty top priority in US trade negotiations
FOREIGN Affairs Minister Datuk Seri Mohamad Hasan assured that national sovereignty will be a top priority in trade negotiations with the US.
Following US President Donald Trump's announcement to impose new retaliatory tariffs on all Malaysian exports effective Aug 1, Mohamad said trade negotiations with the US are still in progress and the government is carefully and rationally presenting the value of maintaining bilateral relations.
These discussions would also go beyond trade issues as they involve Malaysia's stance as a neutral nation and ASEAN member which upholds regional inclusivity.
'We want to ensure that our shared interests are well protected. These tariff negotiations must not harm our bilateral relations.
'Malaysia is a strategic partner to the US, as well as to other countries. Any attempt to divide us is unhealthy,' he said after presenting contributions in the Rantau state constituency yesterday.
The US announced a 25% tariff of all Malaysian products, up by 1% from its initial decision, which is expected to strain Malaysia's export-reliant economy. It also raises concerns about the future of trade relations between the two countries.
Earlier, Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz assured that Malaysia will protect all its key sectors during the renegotiation of the tariff hike.
The US Trade Representative (USTR) had previously labelled Malaysia's halal import rules as a trade barrier.
Responding to comparisons with Indonesia's lower 19%, Mohamad stressed that negotiations should treat all countries fairly to preserve regional cooperation.
'We don't want this to be seen as a threat to our bilateral relationship. That's why the scope of negotiations should be broader — not just focused on trade but also on national sovereignty,' he said.
Moreover, Bank Mualamat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid stressed that Malaysia should never compromise on its national interests. Doing so would cause the government to lose control over important fiscal and economic policies.
National sovereignty must remain in the core principle when negotiating tariffs with the US and Malaysia should not succumb to investor pressure to dominate key sectors such as banking and utilities.
'The concern is that if we follow too much external influence, the government may lose control over its own policy decisions. Therefore, sovereignty must remain the main foundation in these negotiations,' he told Utusan Malaysia yesterday.
Meanwhile, economist Prof Dr Barjoyai Bardai warned that Malaysia could lose up to RM30 billion in export value if the high tariff continues.
However, he believed the impact will be short term if Malaysia actively seeks new markets and boosts trade ties with countries like China.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Sun
15 minutes ago
- The Sun
Malaysia-Thailand boat race to boost border economy
PASIR MAS: The plan to hold a boat race competition between Malaysia and Thailand along Sungai Golok could breathe new life into a shared cultural tradition while boosting the local economy. Kelantan Tourism, Culture, Arts and Heritage Committee chairman Datuk Kamaruddin Md Nor said the event would create opportunities for small businesses, homestay operators, and tourism service providers in Pasir Mas and nearby border areas. 'We feel that events like this can revive the local economy because travellers will come not just to watch the boat race, but also to sample the traditional food, stay in local hotels or homestays and purchase handicrafts,' he told reporters during a trial race at Sungai Golok. The proposed venue, Pohon Jambu base, is already a popular gathering spot for Malaysian and Thai communities. Kamaruddin noted that its strategic location would directly benefit nearby economic activities. 'This place is beautiful and suitable for such an event because the river is not too wide and already has basic facilities. We also receive good cooperation from the Sungai Golok authorities,' he said. Discussions are underway to expand the event by including more teams from Kelantan and Thailand's Narathiwat province, potentially making it an annual affair. A unique blindfolded boat race is also being considered to attract more visitors. The recent two-day trial race featured 40 teams, including five from Malaysia, drawing around 1,000 spectators. Such events not only preserve cultural heritage but also play a key role in revitalising the border economy, heavily reliant on tourism. - Bernama
New Straits Times
15 minutes ago
- New Straits Times
Relaxed foreign equity rules may spur M&A interest in smaller Malaysian banks
KUALA LUMPUR: Smaller Malaysian banks could be potential targets if the government relaxes its rules on foreign equity ownership in strategic sectors incuding financial services, analysts said. They named the likes of Alliance Bank Bhd, AMMB Holdings Bhd, MBSB Bank Bhd and Affin Bank Bhd that could attract interest from foreign players. MBSB Investment Banking Bhd (MBSB IB) said regional players from Singapore and China with a deeper strategic stake in Malaysia would likely be keener than the Western peers. MBSB IB noted that Western institutions, including Citibank and Standard Chartered, had recently withdrawn from the Asean region, citing intense competition as the main reason. Players from Singapore could be among the suitors due to the republic's geographical proximity, and deeper ties with Malaysia, while China has been forging strategic partnership with Asean as of late. MBSB IB said AMMB has long been viewed as a potential candidate for mergers and acquisitions, given its modest size and the fundamental improvements it has made in recent years. This is further supported by speculation that its major shareholder and founder Tan Sri Azman Hashim may be open to selling part of his stake if the valuation is favourable "In the case of Affin, Bank of East Asia is said to have been looking to dispose of its holdings for quite some time," it added. Malaysia reportedly was considering easing foreign ownership limits in strategic industries, including the banking and power sectors, as part of efforts to reduce the 25 per cent US tariff on the country's goods. Currently, Malaysia imposes a 30 per cent cap on foreign ownership in commercial banks, while foreign equity in investment and Islamic banks is limited to 70 per cent. Affin Hwang Investment Bank said any liberalisation in rules will have to be open to all foreign entities and not just US companies although it relates to negotiations on US tariff on Malaysian goods. "We gather that DBS is interested to acquire a controlling stake in Alliance Bank, and the possible easing of foreign shareholding limits in local banks will be positive for the banking group, given the potential entry of a strong strategic shareholder. "Public Bank Bhd could also see M&A interest from foreign entities and helo clear the current share overhang due to the majopr shareholders' plan reduce their stake," Affin Hwang added.
New Straits Times
15 minutes ago
- New Straits Times
Easing foreign equity caps may boost FDI but raises sovereignty risks, say economists
KUALA LUMPUR: Easing foreign equity limits in strategic sectors may unlock fresh foreign direct investment (FDI) inflows into Malaysia but also pose structural and sovereignty-related risks, economists said. Malaysia has gradually liberalised its foreign equity rules including allowing up to 100 per cent ownership in the manufacturing sector since 2009. The country, however, still imposes significant limits in sectors like telecoms, finance, insurance, agriculture, property and healthcare. Investment, Trade and Industry Ministry last week reportedly said it was in talks with regulators and key industries about relaxing foreign ownership limits as part of efforts to reduce the 25 per cent US tariff on Malaysian goods. UCSI University Malaysia associate professor in finance and research fellow at Centre for Market Education Dr Liew Chee Yoong said the economic and structural impacts would likely be multifaceted. Liew said relaxing equity limits in Malaysia could potentially boost FDI inflows by 15-25 per cent in selected sectors, offering much-needed capital for infrastructure upgrades and technological progress. "This could facilitate valuable knowledge transfer, particularly in areas like 5G deployment, financial technology and cloud infrastructure," he told Business Times. Greater competition from foreign players could spur innovation and may lead to more competitive pricing for consumers, he added. "Strengthening linkages with global corporations might also bolster Malaysia's position within international supply chains," he said. Liew said the push for Malaysia to ease the caps is driven by a combination of interrelated factors. "Primarily, the US seeks enhanced market access for its corporations, particularly large financial institutions, telecommunications providers and technology firms, enabling them to gain controlling stakes and greater operational influence within Malaysia's developing economy. "This push also aims to secure competitive parity for US companies against regional rivals, such as Singaporean or Chinese firms, which may operate under different frameworks or have established significant regional headquarters." He added that these kinds of requests are frequently used as bargaining tools in broader trade talks, such as under the Indo-Pacific Economic Framework, to gain certain advantages. From a geopolitical standpoint, strengthening economic ties through investment is a strategic move to offset China's growing influence in the region, he said. Balancing growth and sovereignty Liew said one of the main advantages from the possible relaxation is the substantial inflow of foreign capital, which plays a crucial role in enhancing national infrastructure and supporting the growth of high-value industries. He added that gaining access to advanced technologies and international best practices could boost productivity and competitiveness, create jobs in higher-value sectors, and deepen economic ties with key partners such as the US. "However, these advantages are counterbalanced by substantial risks. Foremost is the erosion of control over strategic national assets and key industries, raising sovereignty concerns. "Domestic firms, particularly small and medium enterprises and Bumiputera-owned companies, face the risk of marginalisation or acquisition," he added. Liew said the disruption to long-standing socio-economic policies designed to ensure equitable wealth distribution could have significant political and social repercussions. "Furthermore, substantial profit outflows from foreign-controlled entities could negatively impact Malaysia's foreign exchange reserves and current account stability over time," he added. Putra Business School associate professor Dr Ahmed Razman Abdul Latiff said Malaysia imposes equity restrictions to promote greater local participation in industries and to ensure that wealth distribution benefits local investors and, ultimately, the broader population. "Lifting up such restrictions is still doable as long as the initial objectives are maintained or strengthened. "Maybe no longer through equity participation but perhaps with higher technology transfer such as technical know-how and co-sharing of intellectual properties rights," he added. Razman said this approach helps accelerate innovation within local industries and enables the development of competitive homegrown products, which in turn supports the long-term sustainability of local businesses. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said opening up Malaysia's economic sectors to foreign investors must be done thoughtfully to safeguard local interests. "At the same time, we would also want our local companies to be able to compete effectively and be able to penetrate the overseas market," he said. Current landscape of foreign equity in Malaysia Afzanizam said as of June 2025, foreign ownership in Malaysian equities stood at 19 per cent, down from the historical peak of 25.1 per cent recorded in June 2013. This comes despite the market's appealing valuation, with the FTSE Bursa Malaysia KLCI trading at a price-to-earnings ratio of around 14 times, compared to the historical average of 17 times. "Among the criticisms is the liquidity of the stocks as the large companies, especially the government linked companies are being held by domestic institutions such as the government linked investment companies. "This has led to the amount of available stocks to invest is not economically viable for the foreign institution to invest from the liquidity stand point," Afzanizam told Business Times. Meanwhile, Liew said many service industries in Malaysia still face strict foreign ownership limits. For example, the telecommunications sector generally allows up to 49 per cent foreign ownership, while commercial banks are subject to a lower cap of 30 per cent. Investment and Islamic banking are typically limited to 49 per cent as well. "The insurance sector allows up to 70 per cent foreign ownership. Further limitations apply to agriculture and property, such as thresholds between 30 per cent and 50 per cent for agricultural land. "Crucially, the long-standing Bumiputera policy, mandating a 30 per cent equity share for Bumiputera interests, continues to influence ownership structures across various sectors," he shared. Key industries likely under review Afzanizam said Tengku Zafrul may have been referring to key sectors such as telecommunications and banking, given their significant role in Malaysia's economy. Sharing a similar view, Liew noted that the telecommunications sector is currently subject to a 49 per cent foreign ownership cap, which impacts major companies like Maxis Bhd and Axiata Group Bhd. He added that banking restrictions are even more pronounced, with commercial banking limited to 30 per cent foreign ownership and investment banking to 49 per cent. "Other sectors likely under discussion include professional services such as legal, accounting, and engineering firms, which often face limits between 30 per cent and 49 per cent; private healthcare, capped at 30 per cent; and potentially defence-related industries or critical transport infrastructure like ports and airports, deemed vital for national security and sovereignty," Liew said.
